ENVIRONMENTAL ECONOMICS AND POLICY

The course is designed to introduce students to the origins of the sustainability problem, the foundations of environmental economics and the formation of environmental policy. Students will learn concepts related to market failures for environmental goods and the tools of economic policy to address them. Approaches for measuring economic value for the environment and cost-benefit analysis will be also presented. The course covers recent and current applications.

KNOWLEDGE AND UNDERSTANDING AND THEIR APPLICATION: At the end of the course, students will have a comprehensive understanding of the sustainability issues from an economic perspective. They will be able to apply insights from the economic theory to evaluate  environmental problems and to assess the fundamental economic tools for environmental policy analysis and management.

MAKING JUDGEMENTS: The course will foster the comprehension of  complex problems related to modern environmental problem.  Learning outcomes from the course can be used to assess critically specific environmental policy areas such as climate change.

COMMUNICATION SKILLS: Students will receive intensive training to improve both written and oral communication skills. 

LEARNING SKILLS: By the end of this course, students will be able to express an informed view on the role, contribution, and limitations of economic tools in providing policy guidance on environmental issues.

Although not compulsory a background in microeconomics is desirable.

Attendance will be taken every class and is part of your class participation grade.

Overview of environmental economics (Harris and Roch: ch. 1, lecture notes)

The origins of the sustainability problem (Harris and Roch: ch. 2, lecture notes)

Markets and environmental externalities (Harris and Roch: ch. 3, Field and Field: ch. 5, lecture notes)

Common property and Public goods (Harris and Roch: ch. 4, Field and Field: ch. 4, lecture notes)

Valuing the environment (Harris and Roch: ch. 6, lecture notes)

Benefit-Cost Analysis (Harris and Roch: ch. 7, Field and Field: ch.7, Field and Field: ch. 8)

Environmental policy analysis (Harris and Roch: ch. 8, Field and Field: ch. 9-13)

Ecological Economics (Harris and Roch: ch. 9)

National Income and Environmental Accounting (Harris and Roch: ch. 10)

Policies for Sustainable Development (Harris and Roch: ch. 22)

Global climate change (Harris and Roch: ch. 13 and ch.14, Field and Field: ch.18)

Population and the environment (Harris and Roch: ch. 15)

Agriculture food and the environment (Harris and Roch: ch. 16)

Biodiversity (lecture notes)

The primary texts for the course are:

·       Environmental and Natural Resource Economics: A Contemporary Approach, Fifth Edition by Jonathan M. Harris and Brian Roch, Routledge (2022)

·       Environmental economics: an introduction, Eight edition by Barry C. Field, Martha K. Field, McGraw Hill (2021)

Lecture notes

Grade will be determined by three different factors.

Exams (one mid-term and one final) 70%

Homeworks 15%

Class participation 15%

1) Do economic growth and sound environmental policy necessarily conflict? Identify some areas where a choice must be made between economic growth and environmental preservation, and other areas where the two are compatible.

2) Consider the following supply-and-demand schedule for steel

Pollution from steel production is estimated to create an external cost of $60 per ton.

      a) Using a supply-and-demand graph to support your answer, what is the unregulated market equilibrium (price and quantity) in the steel market?

      b) Add the external costs to your graph from part (a). What is the socially optimal outcome in the steel market (price and quantity)? What economic policy could be implemented to achieve the social optimum?

      c) Using either your previous graph or creating a new one, use welfare analysis to demonstrate that total social welfare is greater at the social optimum than with the unregulated market outcome.

     3) What are the strengths and limitations of using estimates of total economic value to develop environment policy recommendations? How does your answer relate to your worldview (anthropocentric or ecocentric)? 

4) Do you think that the use of cost–benefit analysis to address the problem of climate change is useful? How can we adequately value things like the melting of Arctic ice caps and inundation of island nations? What is the appropriate role of economic analysis in dealing with questions that affect global ecosystems and future generations?

5) Do you think a period of degrowth is needed in developed countries such as the United States? Do you think meaningful steps toward a steady-state economy are politically and culturally feasible?

6) Suppose that your state has a problem with pollution of rivers and lakes, from both residential and industrial sources. You are asked to advise on appropriate pollution control policies. Which kinds of policies would be appropriate? How would you decide whether to recommend standards, technology-based approaches, pollution taxes, permits, or another policy? What factors (e.g., different kinds of pollution) would affect your decision?